Chilled processed food was one of the best performers within the broader French packaged food market in both value and volume terms in 2010. Sales were underpinned by strong demand for natural products beneficial to health and wellbeing, combined with increased innovation and consumers eating in more regularly. Euromonitor International’s Anastasia Alieva looks at how the channel grew over the last year.

According to the latest research from Euromonitor International, sales of chilled processed food increased by 2.9% in volume and 5.3% in value to reach EUR10.4 billion in 2010. A rise in health concerns combined with increasing demand for natural products sustained growth in the category. Strong innovation from manufacturers attempting to address these key consumer trends also contributed to chilled processed food’s good performance, making it one of the most resilient food categories during the credit crunch.

In terms of volume growth in 2010, chilled processed food developed at a slightly lower rate than the CAGR of 3.3% seen during 2005-2010, reaching 982,000 tonnes at the end of the review period. This minor slowdown in consumption was mainly due to many consumers resuming home cooking using fresh products in a bid to save money during challenging economic times. Despite sluggish consumption, strong innovation ensured that value growth in 2010 outperformed the CAGR of 4.5% seen during the review period as a whole.

The average unit price of chilled processed food increased by 2% in 2010 to reach EUR10.60/kg. Most categories registered an increase in average unit prices, in part as a result of increasing product sophistication. Chilled processed fish/seafood experienced the fastest price increase, with average unit prices up by 5% to EUR16.60/kg in 2010. A limited supply of fish combined with increasing demand led the price of chilled processed fish/seafood to rise.

Chilled processed food benefits from a fresher image than frozen and canned food, being perceived as healthier and more natural. Manufacturers’ efforts to improve recipes have also contributed to the positive image of chilled processed food. Most manufacturers have stripped back their list of ingredients by taking out preservatives and additives to meet consumers’ increasing demand for naturalness.

Fish and seafood most dynamic

With consumers cutting back on eating out, the shift from out-of-home consumption to in-home consumption has benefited chilled fish/seafood. Consumers have tried to recreate a restaurant experience by cooking their own gourmet meals at home or by organising a dinner with friends or an apéritif dînatoire, a mix between an apéritif and dinner.

Chilled processed meat, accounting for almost two thirds of chilled processed food in value terms, grew by 4% to EUR6.2 billion in 2010. Segmentation in chilled processed meat is quite complex in France since it includes an array of product types. Cooked ham is the first contributor to the category, with a 25% value share in 2010. Its value-for-money credentials continue to attract consumers in a period where price has become a key factor in purchasing decisions.

The health and wellness and natural trends have pushed forward cooked ham, with organic, halal and high quality red label being the main growth drivers. The gourmet and premium positioning of cured ham (including dry cured ham), the second largest category within chilled processed meat, with an 18% value share, attracts consumers wishing to recreate a restaurant dining experience at home.

In chilled processed meat, health continued to be the main driver of product development in 2009/2010. Reduced-fat and reduced-salt products have flourished on shelves to meet consumers’ demand for better-for-you products. Amongst the most noticeable new product launches in 2010 was the first reduced-fat and reduced-salt dry cured ham in France, launched by Aoste Group in March 2010 under the Weight Watchers licence.

National brand manufacturers have launched an array of products across chilled processed meat in the halal segment, cashing in on the growing demand for such products in France. Category leader Fleury Michon has introduced more than 15 products in one year, having invested in the poultry category with the launch of a halal range at the beginning of 2010 to compete with Herta’s halal range in the same category.

In chilled processed fish/seafood, naturalness has been the main innovation driver. In line with its premium positioning, Fleury Michon has introduced the Selection range, a range of ultra-indulgent crabsticks without polyphosphates, sorbitol and glutamate to meet consumers’ desire for more natural products. Launched in April 2010, this new range is also certified with the MSC (Marine Stewardship Council), which guarantees the product to come from a sustainable fishery. In order to support its new crabsticks range, Fleury Michon launched a display campaign in May-June 2010 and also planned 250 days of in-store communication from May to July 2010. A promotional campaign on packs has also run since April 2010.

Meralliance’s range of Armoric easy-to-cook fish has been successful partially due to its flow pack packaging, which facilitates the cooking process, but also reinforces the product’s fresh image.

Private label remains highly competitive

Retailers have developed private labels in every category to compete with national brands. For instance, Casino has launched its own halal chilled processed meat range. Retailers have also introduced their own organic private label ranges and have pushed their private label products hard to cash in on the economic downturn through price cuts and promotions. Private label products are cheaper than branded products and are easy to promote as a good way to reduce consumers’ food bills. Private label’s value share of chilled processed food reached 37% in 2009.

Way forward

Sustainability is likely to be a key trend that companies will be pushing over the forecast period to tap into an increasingly environmentally-aware consumer market. Manufacturers are expected to emphasise the provenance of their products or to adhere to ethical standards through sustainability programmes. Fleury Michon has already led the way with its Selection range certified by the Marine Stewardship Council, but more manufacturers are likely to follow the ethical trend.

Demand for chilled processed food is expected to remain strong, with a constant value CAGR increase of 3% during 2010-2015, mainly thanks to strong interest in healthy and natural products. As a general trend, products positioned towards health and wellness are likely to perform well over the forecast period, whilst products considered to be less healthy such as dried sausages and chilled pizzas could underperform the overall category.

Chilled smoked fish/seafood is expected to continue to outperform chilled processed food overall with a CAGR rise of 7% over the forecast period in constant value terms. Unit prices are expected to increase between 2010 and 2016 due to the emphasis put on sustainable fishing practices.

Opportunities to create new usages and also new segments such as organic or halal chilled processed food are likely to help increasing frequency of purchase and recruit new consumers.